Middle class to spur growth, says report

Africa’s economy is expected to grow by 50 per cent in the next five years driven by an expanding middle class that is spearheading rapid urbanisation, a new report says.

The report, by global consulting firm Deloitte, noted that the continent’s economy will expand to $3.7 trillion by 2019 from the current $1.1 trillion.

The Africa: A 21st Century View report says that the continent’s middle class is expected to increase to more than half a billion people by the year 2030.

GAIN FURTHER TRACTION

“Africa presents many opportunities at present and these are only likely to grow as the groundswell of economic momentum gains further traction in coming years,” advisory leader at Deloitte East Africa Rodger George said.

The expected expansion will see mobile penetration grow from 72 per cent currently to 97 per cent by 2017 as the continent adds 334 million new smartphone subscribers across the region to its list.

Deloitte discounts the notion that the continent’s growth will be hinged on discovery of natural resources and exports instead, pointing out this will be fuelled by consumer opportunity and rising incomes.

“Much of Africa’s economic potential still remains untapped by international investors, particularly in the emerging consumer sector, but this is set to change in the next decade and a half,” added Mr George.

SHOW SIGNS OF SLOWING

As high growth economies like China, India and Brazil show signs of slowing, the report notes that international businesses are increasingly looking to the fast-growing African market for new development opportunities.

Despite significant growth prospects, Africa remains complex and carries risk especially with 54 countries that have different markets and challenges.

Issues such as lack of infrastructure, poor governance, fragile security and unreliable logistics were also cited in the report as key risk areas to potential investors.